NZF's position delicately placed: S&P

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Standard & Poor's has cut NZF Money's credit rating to “CCC-” with a negative outlook, saying its liquidity position “remains delicately placed.”

Tuesday, May 10th 2011, 6:49AM 1 Comment

Early in March, S&P cut NZF's rating to "CCC,"citing its weakened liquidity position and questioning its ongoing viability.

S&P says it now expects the cash position of NZF, which is owned by the listed NZF Group, to be volatile and to "drop to very low levels through calendar 2011, absent a further cash injection into the business."

At the end of April, NZF missed yet another self-imposed deadline for announcing a deal with much-needed equity partners.

"Of greatest concern is that failure to progress the repayment of past-due loans could result in NZF running short of cash in calendar 2011, particularly if debenture-reinvestment experience is weak," says S&P credit analyst Nico De Lange.

"NZF's on-balance sheet cash position has improved recently as a result of some successful loan repayments (net of a secured loan repaid to one of its directors) and a cash injection from NZF Group," De Lange says.

"However, anticipated loan repayments continue to be delayed and scheduled debenture maturities through calendar 2011 remain material when assessed against projected cash levels, in our view."

NZF's last statement at the end of April said two parties interested in providing equity were still completing due diligence. NZF has been seeking new equity since early last year.

NZF, which reported a $1.4 million net loss for the six months ended September, is required by NZX listing rules to report its full-year results by May 30.

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